Sustainable Finance Newsletter - Many CFOs embrace sustainability
By Ross Kerber
June 26 (Reuters) -As regulators in Washington, Brussels and elsewhere push companies for more environmental and social disclosures, a lot of top executives at corporations globallythink the new reporting could actually help their businesses.
You can read about that finding from a new study in this week's newsletter. I've also got links to a good story about the cautionary marketing approach that Big Food is taking toward new weight-loss drugs, and an intriguing, if after-the-fact, disclosure about votes that T. Rowe Price cast on pay and directors at Tesla earlier this month.
Please connect with me on LinkedIn. If you have a news tip, potential content, or general thoughts you can email me at ross.kerber@thomsonreuters.com
CFOs come to grips with ESG regulation
Corporations face a growing number of sustainability regulations calling for new reporting and operational changes, a situation you might think would depress the executives who must pay for it all.
But a new study shows many corporate chief financial officers globally in fact are confident they can make changes that will help their bottom line.
That's according to an Accenture survey of CFOs and other senior finance executives from 730 companies around the worldwith at least $1 billion in revenue.
Among the consulting company's findings was that even among companies with "moderate" ESG capabilities currently - the majority of those surveyed - 59% of the executives disagreed with the statement that "striking a balance between sustainability and profitable growth is a challenge for my organization." Only 30% agreed that focusing on sustainability negatively affects the interests of shareholders.
Jens Laue, Accenture's ESG Measurement, Analytics and Performance Lead, said that the executiveshave largely embraced sustainability reporting and practices because of new rules, or because they see it as a competitive advantage.
Some CFOs, Laue said, "see the regulation and the requirements they want to be compliant, it’s not negotiable." Another group of executives, he said, "Look beyond it and see value in it and say ok we have to do it but let's make sure its not (just) a compliance exercise. Let's look for value in it, and decrease costs," he said.
Under the EU's Corporate Sustainability Reporting Directive companies must make broad social and environmental disclosures in their annual reports. Also, in March, the U.S. Securities and Exchange Commission adopted a rule to require companies to disclose certain climate-related risks, although it was stayed in April pending judicial review.
Separately the U.S. state of California adopted new emissions disclosure requirements starting in 2026. Asian countries are also adopting disclosure standards.
The new rules are on the executives' radar.Accenture found 72% of the groupfelt pressure from regulators and government to act on sustainability, the most of any category, followed by board members (71%) and investors (55%).
Do notget the impression all companies are fine with the new rules. The U.S. Chamber of Commerce, the top U.S. business lobby, has sued the SEC over its climate rule and cited a figure of more than $4 billion compliance costs.
But the majority of the executivesAccenture surveyed, 533, have already taken stepssuch as putting quality controls on their ESG data or making it available throughout their organizations. Even though these systems have costs, they can help companies save money within a few years such as by allowing them to use green bonds for reduced financing expenses, Laue said.
"I was relieved to see some of the results," Laue said. ESG reporting, he said, "is seen as an effort, but something that brings return on new investment."
Company News
European Union antitrust regulators charged on Monday that Apple AAPL.O breached the bloc's tech rules, a charge that could result in a hefty fine for the iPhone maker which also faces another investigation into new fees imposed on app developers.
Global food companies like Nestle,NESN.S Coca-Cola, KO.O and Conagra CAG.N are taking a cautious approach in their marketing to users of weight-loss drugs like Ozempic, wary of regulatory scrutiny.
Under Armour UAA.N agreed to pay $434 million to settle a 2017 class action lawsuit accusing the sports apparel maker of defrauding shareholders about its revenue growth in order to meet Wall Street forecasts.
On my radar
Most T Rowe TROW.O funds backed the record $56 billion pay of Tesla TSLA.O CEO Elon Musk, a disclosure showed, citing fairness and precedent. All its funds voted against the two Tesla directors up for election, however, over "our longstanding concerns about the composition and effectiveness of the Tesla board."
BlackRock BLK.N said the infrastructure asset class, currently valued at US$1 trillion, will become a fast-growing private market segment. In a paper on its website the top asset manager said trends like urbanization and artificial intelligence require things like super batteries or hyperscale data centers.
Where sustainability pressure comes from https://reut.rs/4ch8ITu
Reporting by Ross Kerber in Boston; Editing by David Gregorio
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